South Korean battery manufacturers struggle to maintain full production due to escalating competition from China
In the first half of 2025, the global electric vehicle (EV) market has shown signs of recovery, but Korean battery manufacturers are operating at about half capacity. This sluggish operation is primarily due to a global slump in EV demand, causing a significant decline in factory utilization rates.
LG Energy Solution, one of the leading Korean battery makers, reported an average utilization rate of 51.3% in the same period, producing approximately 10 trillion won ($7.2 billion) worth of products. This represents a steady decline from the utilization rate of 73.6% in 2022. Samsung SDI and SK On also experienced similar operation rates, hovering slightly above 50%.
The reduced production reflects the weaker global EV sales recovery and a shrinking market share as Chinese competitors intensify competition in the EV battery sector. Korean companies’ combined global market share dropped to 16.4% in early 2025, a decline of 5.4 percentage points from the previous year, due largely to Chinese firms’ aggressive growth and advancements.
Chinese battery manufacturers have notably impacted Korean firms by expanding their presence and increasing market share in the global EV battery market. This heightened competition pressures Korean makers to cut back production and boost R&D spending to innovate next-generation technologies like solid-state batteries, aiming to reclaim competitiveness.
For instance, LG Energy Solution invested 620 billion won for R&D, up from 4.2% of sales in 2024. Samsung SDI allocated 704 billion won for R&D in the first half of 2025, up from 7.8% of total sales a year earlier. SK On produced 19.6 GWh of products in the same period, a growth of 10.6%, but its utilization rate still lags behind the 87.7% reached in 2023.
The sluggish operation rates of Korean battery companies are also attributed to the rapid growth of Chinese companies in the global EV sector. ByD, ranked sixth globally, recorded a battery usage increase of 153% in the same period. CATL, ranked first globally, recorded a battery usage increase of 33.2%. Three other Chinese companies in the global top 10 also posted annual growth of over 30% in the first half of 2025.
Interestingly, Samsung SDI's US facility under a 50:50 joint venture with Stellantis operated below 60% in the first half. However, SK On's US facilities operated near full capacity due to increased manufacturing by Hyundai Motor Co. in the country. Samsung SDI recorded a 7.8% decline in production in the first half of 2025, placing fifth.
In conclusion, the struggle of Korean battery makers to maintain full capacity production in 2025 is a result of diminished EV demand and escalating competition from Chinese manufacturers, leading to market share loss and operational scale-backs while pushing Korean firms toward increased R&D investment to sustain future growth.
[1] "Korean battery makers struggle with reduced capacity as Chinese competition intensifies." (News article, 2025). [2] "LG Energy Solution's Q2 2025 earnings report." (Company report, 2025). [3] "Samsung SDI's Q2 2025 earnings report." (Company report, 2025). [4] "SK On's Q2 2025 earnings report." (Company report, 2025).
- The financial strain experienced by Korean battery companies in the first half of 2025 is deeply rooted in the industry, with reduced production volumes and declining market share due to intensified competition from Chinese manufacturers in the technology sector.
- In an attempt to sustain future growth and reclaim competitiveness, Korean companies are increasing investments in research and development to innovate next-generation technologies, such as solid-state batteries, as highlighted in LG Energy Solution's investment of 620 billion won for R&D in 2025.
